When will the legal cannabis industry crisis end?

The weakness in stock prices after the first quarter can be attributed to many factors including continued disappointment with the legalization implementations in major U.S. and Canadian markets. The legal cannabis market has been on a downward trend. The market capitalization of the 100 largest cannabis stock companies has fallen from around $86 billion to just over $43 billion at present.

The North American
legal cannabis industry is in crisis. The total market capitalization of the
100 largest cannabis stock companies has almost halved since spring 2019.

Disappointing sales
figures, deaths from the vaporization of THC oils, further scandals and
competition from illegal cannabis suppliers have caused prices to plummet.

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like the Hemp Farm Bill, the legality of hemp, the various health benefits of
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The legal cannabis industry is in trouble

The legal cannabis industry in North America is in trouble due to high taxes and high costs involved in complying with government regulations.

Unless regulations
are relaxed and taxes lowered, the black market will continue to flourish and
legal cannabis producers will lose billions of dollars each year.

For example, the legal cannabis industry in California last year was worth only $3 billion compared to the illegal market which grew to $10 billion.

Cannabis industry becoming real

Georg Wurth,
Managing Director of the German Hemp Association, sees the crisis on the legal
cannabis industry more calmly.

“The cannabis industry is becoming increasingly real. This displaces the fantasy from the share prices. Without wanting to evaluate individual companies, one thing should be clear: with other countries and U.S. states legalizing and the progressive suppression of the black market, the sector will continue to grow in principle,” he explained.

The cannabis market is on trend

Despite some setbacks in the industry, the cannabis market is still predicted to boom. (Source)

Since the end of
April 2019, the legal cannabis market has been on a downward trend. The market
capitalization of the 100 largest cannabis stock companies has fallen from
around $86 billion to just over $43 billion at present.

This is shown by
data from the CannabisMarketCap.io website. The share of the Canadian market
leader Canopy Growth, for example, fell in the same period on the New York
Stock Exchange (NYSE) from almost $52 to less than $19.

Problems for legal cannabis providers

In the U.S., federal
law continues to cause problems for legal cannabis providers. Although numerous
U.S. states have legalized cannabis, THC is still an illegal drug according to
federal law.

As a result, banks
deny cannabis companies the granting of regular loans. Many smaller cannabis
companies would have liquidity problems as a result.

The cannabis industry, however, is counting on next year’s U.S. presidential elections. If the Democrats win, the chances of complete legalization of cannabis in the United States are good, insiders hope.

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First published in wallstreet:online, a third-party contributor translated and
adapted the article from the original. In case of discrepancy, the original
will prevail.

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Valerie Harrison is a mom of two who likes reporting about the world of finance. She learned about the value of investing at a young age upon taking over her family's textile business when she was just a teenager. Valerie's passion for writing can be traced back to working with an editorial team at her corporate job, where she spent significant time working on market analysis and stock market predictions. Her portfolio includes real estate funds, government bonds, and equities in emerging markets such as cannabis, artificial intelligence, and cryptocurrencies.

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